Nvidia stock valuation hits decade low despite profit boom

Nvidia stock is trading near its lowest valuation in more than a decade, according to Bloomberg, even as the chipmaker's revenue and net income are each expected to grow by roughly 90% or more in its current fiscal year.

At under 17 times forward earnings, the stock's multiple has been cut in half compared with 2025 — a period when Nvidia's expansion was actually slower — and has fallen sharply from above 25 times expected profits just this past May, according to Bloomberg.

"The stock has de-rated pretty significantly, which suggests a healthy dose of skepticism that the company's current earnings power is sustainable," Eli Horton, a TCW senior portfolio manager overseeing thematic and durable growth equities, told Bloomberg. "The stock's performance is surprising, given the backdrop of incredible fundamentals, but it tells you the market is expecting less than what the consensus is currently estimating."

One drag on the stock's valuation is a squeeze on profitability. Nvidia's gross margin came in at 75% last quarter but analyst estimates compiled by Bloomberg show it sliding under 72% by the fourth quarter, with a recovery expected thereafter. Rising costs for key components such as memory chips are a central factor.

Competition is another concern. David Russell, global head of market strategy at TradeStation, pointed to the growing threat of customers building their own silicon, noting that Meta Platforms and Alphabet are among the major Nvidia buyers that have moved to design AI chips internally — a shift he believes will gradually erode Nvidia's pricing power and market share. "Multiples expand when companies are well positioned with potential to get better, and Nvidia doesn't offer that," Russell said.

Nvidia stock has gained 22% so far in 2026, putting it second among the Magnificent Seven behind Apple's 25% advance — yet that performance looks modest against the broader chip sector. The Philadelphia Stock Exchange Semiconductor Index has surged nearly 76%, with Intel and Advanced Micro Devices both more than tripling; Nvidia sits near the bottom of the index's leaderboard, even as the index itself carries a valuation of 20 times forward earnings.

Nvidia Chief Executive Officer Jensen Huang has pushed back on the market's assessment, calling the company "the world's first and only growth value stock" and describing Nvidia as "incredibly misunderstood" at a Goldman Sachs technology conference earlier this month.

The valuation discount follows a stretch of strong results. Nvidia stock climbed roughly 7% after its second-quarter earnings, when revenue more than doubled and the company projected 70% revenue growth in fiscal 2028 — well above the 45% analysts had expected at the time.

Horton said the current multiple looks favorable given that neither a pullback in AI infrastructure spending nor a major regulatory intervention appears imminent. "This seems like a very favorable multiple to have as an entry point," he said.